Corsair Gaming makes a smart move to Woo PC Gamers

Sales of gaming computers (PCs) and related devices increased in 2020 as people turned to video games to keep busy amid the pandemic. pirate games (CRSR -3.25% ) He was a huge beneficiary of this trend.

The seller of video game consoles and peripherals saw a huge rise in revenue and profits last year, and its shares nearly doubled within two months of its stock market debut in September. However, at this point Corsair is down year-to-date in 2021, lagging the broader market.

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Evan New of Motley Fool predicted this volatility because early investors and insiders were expected to offload Corsair shares after the closing period after the IPO ended. Investors also appear to be concerned about component shortages that hampered Corsair’s sales in the fourth quarter, as well as the potential for reduced demand for gaming components in a post-pandemic world.

However, the market in which Corsair operates is unlikely to lose momentum, and management is taking smart steps to capitalize on it.

A person holding his head while playing on the computer.

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Corsair Gaming solves a problem for gamers

Corsair recently launched two new pre-built gaming systems – ONE a200 and ONE i200. It is offered with a selection of advanced processors from AMD And the Intel Corporationthese gaming computers will be powered by a file nvidia (NVDA -1.55% ) RTX 3080 GPU. The systems are already available in North America, the European Union, and the United Kingdom, and will later be sold in additional regions as well.

Gamers can start picking up on these gaming PCs, due in part to the severe shortage of graphics cards and other components. Top-notch GPUs are either out of stock or only available at greatly inflated prices. For example, the NVIDIA RTX 3080 was close to $2,200 last month, compared to a suggested retail price of $699. Likewise, due to strong demand and narrow supply, AMD’s Ryzen 9 5900X, which retails for $575 on the manufacturer’s website, is listed at around $850 by the best-priced third-party sellers on Amazon.

The ONE a200 at $3799 has 32GB of RAM (Random Access Memory), 1TB of HDD storage, and 2TB of HDD storage. It also comes with a Corsair liquid cooling system. These components will cost the consumer upwards of $400 in the market, and we did not include the costs of other components such as the motherboard, power supply, and Windows license. So, Corsair’s new gaming systems feel like a bargain as they start at $3,599 and are equipped with high-end parts.

Citing third-party estimates, Corsair reports that 51% of global gaming PCs are priced over $1,800. Jon Peddie Research estimates that consumers spent $18.5 billion on high-end personal computers last year. The company also notes that pre-built and branded systems like those offered by Corsair accounted for nearly two-thirds of the gaming PC market in 2019. All of this suggests that there is plenty of room for growth in this largest Corsair business unit. year and beyond.

Financial Impact

The attractive price of the new Corsair systems can give them an advantage in sales, as gamers will be able to save time, effort and additional money needed to assemble a PC on their own. NVIDIA estimates that the GPU supply shortage could continue into 2021. If sourcing high-end components remains an issue for retail customers, sales of pre-built PCs may be stronger than expected.

This bodes well for Corsair’s gaming systems and components business, which posted 45% revenue growth in 2020 to $1.16 billion and generated nearly 69% of the company’s revenue. Also, the sector’s performance is likely to remain strong in the long run. Third-party forecasters predict that shipments of gaming PCs will grow 25% from last year’s level by 2024.

Corsair Gaming is trading 28x for trailing earnings and 17x for forward earnings after its recent slump. So investors looking to add video game inventory to their portfolio should take a closer look at this company, as it solves an important problem for customers during a period of high demand for gaming PCs.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.